Published: 17 April 2015 г.
BISHKEK, KYRGYZ REPUBLIC (16 April 2015) – Growth in the Kyrgyz Republic is set to rebound slightly in 2016 on improved external conditions, after a dip in 2015 caused by an expected contraction in the Russian Federation economy, said a recent report by the Asian Development Bank (ADB).
The Asian Development Outlook (ADO) 2015, ADB’s flagship annual economic publication, forecasts gross domestic product growth of 2% in 2016, up from 1.7% projected in 2015.
Immediate prospects for the economy will be constrained by economic pressures on the Russian Federation and Kazakhstan, where most Kyrgyz migrants work, with remittances expected to fall by 15% or more in dollar terms in 2015.
“Lower remittance inflows will constrain household incomes and consumption in 2015 but the picture looks slightly brighter the following year with some expected improvement in external economic conditions,” said ADB Country Director Rie Hiraoka.
Inflation is set to exceed 10% in 2015, after averaging at 7.5% in 2014, while the current account deficit seen reaching 15% of GDP. Growth in 2014 was affected by a slump in gold output, although there were improvements in some sectors.
“A 16% decline in gold production at the main Kumtor gold mine cut GDP growth by two-thirds to 3.6% in 2014 from 10.9% in 2013,” said Gulkayr Tentieva, ADB’s Senior Economics Officer in the Kyrgyz Republic. “However non-gold sectors grew by 4.6% on the back of an expansion in services and construction.”
Services in 2014 grew by 4.1% as higher consumer demand and improved cross-border trade boosted retail and wholesale trade by 7.2%, services of hotels and restaurants by 9.6%, and transportation by 4.3%. Agriculture, by contrast, contracted by 0.6% due to adverse weather conditions.
The Kyrgyz som depreciated by 19.1% in 2014 and by the end of the year, the country’s foreign exchange reserves had fallen to $1.96 billion from $2.24 billion at end 2013. To limit inflation, the central bank sharply raised policy interest rates from 4.16% at the beginning of 2014 to 10.50% at the end of the year.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.